Brent Crude Rally Above $69 Boosts Naira Outlook as CAD Weakens to N994
Nigeria's external reserves and currency prospects strengthen as Brent crude trades $4.15 above the 2026 budget benchmark of $64.85 per barrel, while the Canadian dollar weakens to N994 in the official market.
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Brent crude's sustained rally above $69 per barrel is positioning Nigeria for improved foreign exchange reserves and fiscal revenues, trading 6.4% above the federal government's 2026 budget benchmark of $64.85, according to market data from The Nation Newspaper. The price movement comes as the naira maintains relative stability against major currencies, including the Canadian dollar which has weakened to approximately N994 in the official foreign exchange market.
The crude price rally represents a critical development for Africa's largest oil producer, which derives roughly 90% of its foreign exchange earnings from petroleum exports. Nigeria's external reserves, which stood at $36.73 billion as of February 2026 according to Central Bank of Nigeria data, are expected to receive significant inflows if current price levels hold through the second quarter.
"With Brent crude trading around $69 per barrel—above Nigeria's 2026 federal budget benchmark of $64.85—the price rally would largely bolster the country's fiscal revenues, foreign exchange reserves and promote exchange rate stability," The Nation Newspaper reported. Each dollar above the budget benchmark translates to approximately N800 billion in additional revenue annually, based on Nigeria's projected daily production target of 2.06 million barrels per day including condensates.
The naira's performance against the Canadian dollar has shown relative resilience amid broader currency market volatility. According to Legit.ng, "The Nigerian currency remained stable against the Canadian dollar, trading near N994 in the official market while the parallel rate hovered above N1,065." The 7.1% spread between official and parallel market rates represents a narrowing from the double-digit differentials observed in late 2025, suggesting improved foreign exchange liquidity.
The Canadian dollar's depreciation against the naira—a reversal from historical trends—reflects broader weakness in commodity-linked currencies amid uncertainty in North American trade policy and monetary policy divergence between the Bank of Canada and the U.S. Federal Reserve. The CAD has declined approximately 3.2% against a basket of emerging market currencies year-to-date, making Canadian assets and relocation costs more accessible for Nigerian professionals and investors.
For Nigeria's monetary authorities, the confluence of higher oil revenues and stable exchange rates provides operational room to rebuild external buffers depleted during the 2023-2024 currency crisis. The Central Bank of Nigeria's foreign exchange reforms, including the unification of multiple exchange rate windows and the introduction of willing buyer-willing seller mechanisms, are beginning to show results in market pricing efficiency.
However, analysts caution that sustained improvements depend on maintaining crude production levels and avoiding supply disruptions in the Niger Delta. Nigeria has struggled to meet OPEC quotas in recent years due to pipeline vandalism, theft, and underinvestment in upstream infrastructure. The country pumped an average of 1.42 million barrels per day in January 2026, according to secondary sources cited in OPEC's monthly report, still below the 1.5 million bpd quota.
The current oil price environment also tests the government's commitment to subsidy removal and fiscal discipline. President Bola Tinubu's administration removed petrol subsidies in May 2023, a move that initially triggered inflation but was deemed necessary for long-term fiscal sustainability. Higher crude prices could generate political pressure to reinstate subsidies or increase spending, potentially undermining macroeconomic stability gains.
Currency market participants are monitoring upcoming monetary policy decisions from both the Central Bank of Nigeria and the Bank of Canada. Nigeria's benchmark interest rate stands at 27.25%, among the highest in emerging markets, while Canada's policy rate sits at 2.75% following recent cuts. The interest rate differential supports naira stability but raises concerns about domestic credit availability and economic growth.
Looking ahead, the naira's trajectory will largely depend on whether Brent crude can sustain levels above $65 per barrel amid global demand uncertainties and OPEC+ production policy shifts. Geopolitical tensions in the Middle East and production discipline among major exporters have provided price support, but weakening demand signals from China and Europe pose downside risks. For Nigerian policymakers, the current window offers an opportunity to accelerate reserve accumulation and deepen foreign exchange market reforms before potential headwinds emerge in the second half of 2026.